A bullish third quarter statement from Westfield Group all but fell on deaf ears yesterday.
The market noted the tone and lifted the shares 12c to $21.21 on moderate turnover but that was all the reaction there was.
Even good news of solid sales growth in its Australian malls didn't really enthuse a market where investors were more interested in a horse race in Melbourne and lunch
Investors at the moment seem more concerned about the company's exposure to the US economy and its weakening level of consumer activity, and to the UK retailing sector which could follow the US.
Major retailers such as Target, wal mart and others are not optimistic abouit their immediate outlook and major sales for the holiday season are already being heavily promoted.
As well, the stronger Aussie dollar has caused investors to worry about Westfield's earnings from the US in particular, which is now its most important source of profits.
The Aussie traded around 92.60 USc overnight.
Westfield has traded as high as $23.49 in recent months, but that was in March, just as the Aussie dollar started rising from around 78-80 USc. The subprime problems and US housing slum have driven the US dollar lower and the Aussie higher since August, putting extra pressures on the Westfield share price.
But the company did raise $3 billion mid-year so it is cashed up and ready to take opportunities, should they arise.
Australian retailing conditions are buoyant, which helps. In fact figures from the company yesterday showed that Australia is clearly its best performing market with retail sales growing at more than twice the rate in another of its regions.
That's actually one of the factors why interest rates are on the way up here: the retail boom is just too strong.
Westfield said in a third quarter update yesterday that it experienced strong occupancy levels and solid demand from retailers for space in third quarter.
The group said highlights included the opening of five major development projects worth $1.5 billion in four weeks.
They include the Derby redevelopment in East Midlands, the redevelopment of Kotara in Newcastle, the redevelopment of Annapolis in Maryland and the development of a new centre on Auckland's North Shore in New Zealand.
Westfield's Managing Director, Steven Lowy, said the delivery of the five major projects across four countries in a four week period was unprecedented.
"Each project has delivered a strong yield and created significant long term value for the group," Mr Lowy said.
"These projects completed at an aggregate cost of $1.5 billion (Westfield Group investment $1.0 billion) have delivered strong investment returns, achieving a weighted average income yield of 9.4 per cent thereby being accretive to the Group's operational and development earnings."
Mr Lowy said the redevelopment of Westfield Derby was the group's first development in the United Kingdom and was delivered six months ahead of the original schedule and in line with forecast.
"The successful delivery of our first UK project at Derby is particularly significant for the group, confirming our ability to transfer development expertise to a new market," Mr Lowy said.
Mr Lowy said the group's global development program continued to enhance the value and market penetration of the existing portfolio.
Westfield currently has $5.6 billion of development projects underway and in excess of $10 billion of new development projects expected to commence over the next three years. Westfield's share of that will be $9 billion and that's what it raised the $3 billion for.
Westfield said there was strong occupancy levels and continued solid demand from retailers across all markets.
Among the eleven projects currently under construction, which will cost a total of $5.6 billion (Westfield's share, $3.7 billion) six are in the United States, four in Australia and New Zealand and one in the United Kingdom.
In terms of shopping centre performance, Westfield said it had leased 99.5% of its Australian and New Zealand portfolio, at $1,247 per square metre in Australia and $NZ1,031 per square metre in New Zealand, a 5%.
In the US, 93.5% of the portfolio is leased, at $US44.23 per square foot, up 4.5%, while 99% of the portfolio is leased in the UK at STG 644 per square metre, a 3% growth rate.
Quarterly sales growth in Australia was 5.6%, in the United Kingdom 2.1%, the United States 1.9 and New Zealand, up 2.2%.
Specialty store sales in the US had grown by 1.9% in the last three months, 2.4% in the last nine months and 2.5% over the last year.
In Australia, specialty stores had grown at 7% in the last three months, 6.6% in nine months and 6.2% over the last year.
In Australia, major store sales grew at 3.1% in the last three months; in the UK, by between 2.1% and 2.7% over the past year.
In terms of retail sales growth by category, Westfield said that in Australia, leisure stores experienced the greatest growth in a year at 11.4%, followed by jewellery stores with 10.1%, while discount department stores experienced the lowest growth levels at 1.3%.
In the US, jewellery stores experienced negative sales growth of 1.8% over the past year, while leisure stores experienced the greatest growth levels at 7.2%.
